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Arent Fox’s this week in telecom - July 1, 2013

Welcome to the latest edition of Arent Fox’s This Week in Telecom, our weekly newsletter designed to keep you apprised of recent developments in telecommunications policy, legislation, and litigation.

Federal Communications Commission (FCC) Announcements

The FCC Open Internet Advisory Committee will meet July 9, 2013, at 1:00 pm Eastern. The meeting is open to the public and will be webcast at www.fcc.gov/live. For more information, click here.

The FCC’s Office of Communications Business Opportunities will hold an Access to Capital Conference and Workshop on July 11, 2013, from 9:00 am to 4:30 pm. The morning session will feature a panel discussion, and the afternoon session will consist of one-on-one meetings where small businesses can discuss funding opportunities with the panelists. For more information, click here.

The next two FCC Open Meetings are scheduled for July 19 and August 9, 2013.

The Mobile Market

At its June 27 Open Meeting, the FCC issued a Declaratory Ruling that, according to a Commission statement, “will protect the privacy of consumers of wireless services by clarifying its customer proprietary network information (CPNI) policies.” The item is aimed at making clear that “when a telecommunications carrier collects CPNI using its control of its customers’ mobile devices, and the carrier or its designee has access to or control over the information, the carrier is responsible for safeguarding that information.” Protected information includes phone numbers that a customer has called and received calls from, the durations of calls, and the phone’s location at the beginning and end of each call. The Declaratory Ruling does not impose any requirements on non-carrier, third-party app developers. For more, click here.

At the same meeting, the FCC also adopted a Report and Order establishing an auction of spectrum known as the H block. It will increase the spectrum available for mobile broadband services by opening 10 Megahertz of spectrum in the bands 1915-1920 MHz and 1995-2000 MHz for commercial licensing. The FCC stated that this action will help to meet its obligation to license 65 Megahertz of spectrum for broadband by February 2015, as required by the Middle Class Tax Relief and Job Creation Act of 2012 (the “Spectrum Act”). The Report Order and separate statements by members of the Commission are available here. (WT Docket No. 12-357)

The FCC Notice of Proposed Rulemaking on contraband cellphones in prisons has been published in the Federal Register. Comments are due July 18, 2013, and Reply Comments are due August 2, 2013. In the NPRM, the FCC states that “[p]risoners’ use of contraband wireless devices to engage in criminal activity is a serious threat to the safety of prison employees, other prisoners, and the general public.” The proposed rules would make it easier for correctional facilities to enter into leases or spectrum management agreements, allowing them to control which wireless devices were able to access the network. In addition, the proposed rules would “require wireless providers to terminate service, if technically feasible, to a contraband wireless device if an authorized correctional facility official notifies the wireless provider of the presence of the contraband wireless device”. The Commission also invites comment on “other technological approaches for addressing the problem of contraband wireless device usage in correctional facilities.” The NPRM is available here. GN Docket No. 13-111; ET Docket No. 08-73; WT Docket No. 10-4.

Federal Trade Commission (FTC) and Privacy Regulation

On June 27, 2013, the tenth anniversary of the Do Not Call Registry, the FTC announced that it had imposed the largest civil penalty ever for alleged violations of the Telemarketing Sales Rules (TSR). The penalty, totaling $7.5 million, resolves allegations that Mortgage Investors Corporation failed to remove customers from its call lists upon request and misstated terms of available loan products during telemarketing calls. A copy of the press release can be found here.

The Federal Trade Commission is seeking public comment on proposed amendments to strengthen the Telemarketing Sales Rule (TSR) protections against fraudulent charges and services. In particular, the FTC seeks to curtail the use of a number of payment methods favored by unscrupulous entities, including (i) “stop[ping] telemarketers from dipping directly into consumer bank accounts by using unsigned checks and ‘payment orders’ that have been ‘remotely created’” and (ii) “bar[ring] telemarketers from getting paid with traditional ‘cash-to-cash’ money transfers, as well as ‘cash reload’ mechanisms.” Public comments on the proposed amendments to the TSR will be accepted until July 29, 2013. More information is available here.

DATE CHANGE: The FTC has changed the date of its “Internet of Things” workshop to November 19, 2013. It will address the consumer privacy and security issues raised by the growing connectivity of consumer devices such as smart phones, cars, appliances, and medical devices. More information is available here.

New Markets: Smart Grid and E-Health

Rep. Mike Honda, D-Calif., has reintroduced H.R. 2363, the “Healthcare Innovation and Marketplace Technologies Act” (HITMA). Honda introduced the same bill last year, but it died in committee. According to a press release, the legislation would establish a new office at the Food and Drug Administration “to cultivate a predictable regulatory framework on wireless health issues, as well as develop an mHealth support program at the Department of Health and Human Services to help mobile health app developers conform to current privacy standards.” The full text of the bill is available here.

Developments in Intercarrier Compensation

On June 26, 2013, Comcast Phone of New Hampshire LLC filed a notice with the New Hampshire Supreme Court stating that it intends to appeal a New Hampshire Public Utilities Commission (NHPUC) May 2013 order affirming that Comcast’s provision of cable voice service is subject to state regulation. The NHPUC’s decision followed the 2012 enactment of a New Hampshire law that prohibits regulation of the market entry, market exit, transfer of control, rates, terms, or conditions of any VoIP service or IP-enabled service. The New Hampshire Supreme Court instructed the NHPUC to reevaluate its previous decision in light of the new law, and Comcast and other VoIP providers argued that the NHPUC’s previous order was unenforceable as a result of the new regulatory regime. The NHPUC found, however, that Comcast’s cable voice service “constitutes the conveyance of telephone messages to the public.” As such, it held, Comcast is operating as a public utility even within the new regulatory structure and is subject to the minimal regulation associated with the “excepted local exchange carriers” as defined in the new law. In its letter to the New Hampshire Supreme Court, Comcast stated that it disagrees with “these determinations, as well as other aspects of the remand order, and will be filing a motion for rehearing with the” NHPUC. Comcast added that if its motion for rehearing is denied, “Comcast will be filing an appeal with this court.” Docket Nos. 09-004, 12-308.

Compliance Notes

Providers of international common carrier services are required to file their International Traffic Data report for 2012 by July 31, 2013, as required by Section 43.61 of the FCC’s Rules. There is a change in filing protocols for resellers of telecommunications services, providers of miscellaneous telecommunications services, and providers with less than $5 million in international revenue. These providers may report their information via transmittal letter, as outlined in Public Notice issued by the FCC, found here.

All other carriers are required to file complete reports pursuant to the current filing manual which can be found here. A copy of the billing codes for switched services settlement arrangements can be found here. (DA-13-1436).

The Universal Service contribution factor for the second quarter of 2013 is 15.5%. A copy of the Public Notice announcing the rate can be found here. (DA 13-422)

The Universal Service contribution factor for the third quarter of 2013 is 15.1%. A copy of the Public Notice announcing the rate can be found here. (DA 13-1361)

Broadband News

At its June 27 Open Meeting, the FCC adopted an order that modernizes the way it collects data about broadband service. The FCC eliminate some carrier reporting requirements while adding new disclosure obligations like minimum advertised service speed. A summary of the order is available here.

In the Courts

On June 21, 2013, the U.S. District Court for the Northern District of California largely denied the motion to dismiss of Mobile Messenger America (MMA), a mobile content aggregator, against a putative class action alleging that MMA engaged in conversion, unjust enrichment, violations of California’s Utility Code, and violations of California’s Unfair Competition Law (UCL). Wise Media, LLC, a marketing entity, also is a named defendant for a claim under the federal Telephone Consumer Protection Act (TCPA). Plaintiffs allege that they “received unsolicited text messages from defendant Wise Media … that offered flirting tips, horoscope updates, celebrity gossip, or weight-loss advice.” The recipients of Wise Media’s texts were allegedly chosen “through a random sequential number generator,” and “regardless of the nature of the [plaintiffs’] response [to those unsolicited messages], all plaintiffs were enrolled in the subscription plans,” for which a $9.99 monthly charge was added to their mobile phone bill. MMA shared in some of that revenue, the plaintiffs allege. The court agreed that the complaint lacked specificity about how MMA’s conduct violated the “unfair” prong of the UCL, but found that plaintiffs successfully stated a claim under the “unlawful” and “fraudulent” prongs. The court rejected the MMA’s argument that the Utility Code applies only to carriers, finding that “no court has limited Section 2890(a) to telephone companies or precluded its application to billing aggregators.” The court held that MMA could be compelled to disgorge the portion of the $9.99 monthly charges it received through Wise Media’s conduct, and that plaintiffs may pursue their claims for negligence, unjust enrichment, and a state claim known as “money had and received”. Plaintiffs must cure the deficiencies in the complaint by July 12, 2013. Fields v .WiseMedia, LLC, No. C 12-05160 WHA (N.D. Cal.).

Legislative Outlook

On June 27, 2013, the House Commerce Committee sent letters to FCC Acting Chair Clyburn and FCC Inspector General David Hunt regarding alleged fraud and abuse of the Video Relay Service (VRS) program that is funded by the Interstate Telecommunications Relay Service Fund. The letters request information about how invoices from service providers are reviewed and whether VRS compensation adequately reflects cost of service. There is no stated response deadline. To read the letters, click here.

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